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Friday, August 03, 2018
Farmers want protection. They want to know that if they have a contract dispute with their processor, there is a mechanism in place to ensure their interests are safeguarded. They want certainty that there will never be another milk price crisis.
The dairy code of practice which has been in place now for just over a year was the industry’s response to address the power imbalance between farmers and processors. Before the code was introduced in July last year, farmers had little protection against practices used by some processors.
The performance of the code of practice was reviewed by the Australian Competition and Consumer Commission (ACCC) in its dairy inquiry.
Despite recommending that the industry proceed with a mandatory code, the competition watchdog acknowledged the significant effort it took to implement the voluntary code and the positive impact of the code on current-year (2017/18) milk contracts.
But the risk for farmers remains the same and if success is to be measured solely by the strength of the code to eliminate risk, the current code needs strengthening. Some processors are not signatories to the code and there are no penalties enforced for breaches.
How does this prevent a repeat of the milk price crisis? Farmers can take their business elsewhere if their processor isn’t a signatory to the code. But this is a problem in regions with only one monopoly processor. It is not a viable solution and the risk is that suppliers could once again be forced into hardship should the milk price crash.
The ACCC report noted that the current code does not include a mechanism to resolve disputes between farmers and processors – a key difference with the voluntary Food and Grocery Code of Conduct, which introduced an independent adjudicator to resolve complaints.
If a revised code is to provide adequate protection for farmers, it must have binding sanctions for non-compliance and independent management oversight – including reporting and review – of code conditions.
The ACCC report generated considerable discussion around the benefits of a mandatory code. They argued that a mandatory code would eliminate this risk for farmers, providing them with greater protection and paving the way for increased farm investment and processor competition.
But there are still many unknowns that must be investigated before the industry can proceed with a new version of the code.
The dairy industry will wear the burden of paying for administering a mandatory code. Despite media commentary suggesting the cost would be negligible, it is a requirement of the federal Government’s Cost Recovery Guidelines that those affected by the code must pay for its administration.
Part of the code of practice review process is that we assess the potential benefits of a mandatory code to farmers against the expected costs to farmers.
If the decision is made to proceed with a mandatory code, the impact must be fully understood. It will be extremely difficult to reverse the decision if a mandatory code doesn’t operate as farmers expect it should.
We understand the desire for quick action, but farmers should expect their national representative body to conduct this review in a considered and comprehensive manner.
At the end of the process, regardless of the outcome, this will be a significant step with long-term ramifications for the industry, so we must get it right.
It is vital that farmers have the best information available to them and it is our job to provide that guidance and clarity as we are committed to working on improved contractual arrangements for farmers and rebuilding confidence in the industry.
Thursday, July 05, 2018
It’s not news to say that the Australian dairy industry is highly fractured. Divisions exist all along the supply chain, often for historical reasons.
We should acknowledge the impact of the challenges of the last few years - the bargaining imbalance between different sections of the industry, volatile markets reflected in farmgate milk prices, adverse seasonal conditions, and other factors outside farmers’ control.
While there has been hardship for many, this environment has facilitated a culture of blame and negativity, which now permeates the industry and could have destructive consequences.
It is doing none of us any favours to attack our own. Our focus must be on working together to rebuild our industry.
Every step along the value chain depends on strong relationships, based on trust and confidence, the value of which we only know when it’s lost.
Much has been made of the trust deficit engulfing our industry. It has been broadly acknowledged that trust has been lost right across the supply chain. But we cannot let anger describe us. We simply cannot allow the industry to implode.
Tough questions bring forward new options. Cynicism leaves us closed to new ideas. There is always be room for differences to be expressed. But this process must be constructive.
It is vital that we find a way to cooperate, share knowledge and support each other - bring together our considerable capacity for optimism and resources to face the future. Only through sharing our experiences can we truly understand and regain trust in our industry.
Unfortunately, this is common advice which is rarely followed. It is sad to note that the Australian dairy industry traditionally has failed to stick together during difficult times, when unity is most important. We cannot let this vicious cycle of negativity continue.
We have a lot to be proud of as an industry. Our achievements are significant, but imagine how effective we could be as a cohesive, united industry? That’s how we have an impact. That’s how we influence decision makers.
We need to show our unity of purpose, shared belief and passion for the dairy industry. None of us by ourselves has an answer to what may be sought, but unity brings an open, honest, and shared discussion about the challenges faced by our friends, neighbours, or the broader industry.
If we cannot deal with challenges as an industry, there is a real problem. We need unity, collaboration and support if we are to affect change. If we don’t have farmers sitting at the table, we lose the opportunity to help ourselves and influence the future for others
How can we expect government to help us if we can’t first help ourselves? Government doesn’t want us to dump our problems on them. They want us to seriously consider solutions that they can implement to benefit industry.
It’s time to stop being part of the problem and start contributing to the solution. Share your pride in the work we do and value the need to contribute to industry development. Acknowledge the belief others have shown in us through investment and a shared desire for a sustainable industry.
Join a local branch of your state dairy farming organisation, bring forward your ideas and help rebuild a strong and vibrant dairy industry.
Engage with industry leaders at all levels. They need to hear from you. Reach out with respect and ensure they have an opportunity to walk with you and share your issues.
Be tough on issues but also respectful to our friends and others who are taking action on your behalf.
Our industry depends on our ability to unite.
Tuesday, July 03, 2018
We need to address the skilled labour shortage on Australian dairy farms. It’s an issue that has been around for years and can be resolved by the federal Government making minor changes to its skilled migration program.
Technology, automation, intensification, self-regulation and globalisation are making our farms more complex and skills based. In the context of an ageing workforce and difficulties attracting and retaining young people to farming, the dairy industry has become more reliant on skilled foreign workers to operate its farms.
Dairy is Australia’s third largest agricultural industry, with $4.3 billion gross value of milk production and employment of 26,000 people on farm. Despite a couple of difficult years of below average milk prices the industry has added over 3,000 new jobs on farm over the past five years.
Unfortunately, a number of these jobs are being filled by Australians who are ill-equipped to handle the roles. They find it difficult to satisfy food safety standards, administer veterinary and other animal husbandry requirements, operate technology or are generally unable to fulfil the obligations of a skilled dairy farm manager or leading hand.
A consequence of not meeting these performance expectations is turnover. In the last study of pastoral industries employeeturnover was reported to costthe dairy industry between$336and$364millionayear or an average of $22,500peremployeeperfarm. Given that most dairy farms operate as professional businesses paying above award rates, these figures are simply unacceptable.
Some success has been achieved in the industry via Australia’s previous 457 visa class system. Prior to March 2018 when it was abolished, local farmers were able to sponsor skilled overseas workers to work temporarily up to four years in Australia. This enabled the dairy industry to recruit foreigners who had worked for many years on dairy farms or completed tertiary education in agriculture science in their home country.
The Government made changes after the Fair Work Commission found 40 per cent of 457 visa holders were no longer employed by a sponsor or were being paid well below the statutory minimum wage of $53,900. This is significant given Australia’s record high immigration program of 190,000 per annum, most of whom come under the skilled migration program. The unfortunate thing for the dairy industry is that it now must suffer because of other industries abusing the system.
The two new skilled visa classes introduced by the Government include a Short-term stream and a Medium-term stream. The Short-term stream is for employers seeking temporary overseas skilled workers in occupations included on the Short-term Skilled Occupation List (STSOL) for up to two years. The Medium-term stream is for employers seeking highly skilled overseas workers to fill medium-term critical skills in occupations on the Medium and Long-term Strategic Skills List (MLTSSL) for up to four years, with eligibility to apply for permanent residence after three years.
Occupations listed on the STSOL and MLTSSL are determined by the Department of Jobs and Small Business based on an annual survey and analysis of the Australian labour market. The issue for the dairy industry is the survey rarely goes out to farmers, so its needs are not reflected in the list determination.
The department uses the occupations listed on the Australian and New Zealand Standard Classification of Occupations (ANZSCO). It describes the dairy industry as having one job on farm - a Dairy Cattle Farmer, which is completely out of touch with reality.
The more accurate depiction is Dairy Australia’s National Dairy Farmer Survey, which lists five occupations on a dairy farm. In order of skill these include a Business Manager, Production Manager, Senior Farm Hand, Farm Hand and Assistant Farm Hand. The difference highlights the need for an ANZSCO overhaul to reflect the professional and actual nature of dairy farming in the 21st century.
In March 2018 the Department listed a Dairy Cattle Farmer on the STSOL only. This means the amount of time an immigrant can work on a dairy farm has been reduced from four years under the previous 457-visa system to two years under the new STSOL. Given dairy farm jobs are permanent (as opposed to seasonal) and struggling to attract workers at the senior level, this categorisation is a backward step for the industry.
Resolving labour shortages in the positions of Senior Farm Hand, Production Manager and Business Manager can only be achieved by listing them on the MLTSSL. Skilled migrants will only apply for these roles when they are guaranteed four, not two, years of employment and have a pathway to permanent residence.
The Government must ensure its skilled migration program reflects Australia’s workforce needs. All occupations need to be included in the lists and immigration targets set based on numbers required in each occupation.
Agriculture is a growth industry in Australia. We are working on a plan to increase our gross value of production from $60 billion currently to over $100 billion in 2030. There are many drivers required to achieve this target. A permanent skilled workforce is one of the highest priorities.